What follows is a case study excerpt from the Hispanic Opportunity Report developed as part of the California and Nevada Credit Union Leagues’ newly formed partnership with Coopera.

With 80 percent of its members identifying themselves as Hispanic, First Imperial Credit Union (FICU) of El Centro, Calif., knows the importance of catering its products and services to serve the specific needs of this influential community.

Headquartered in close proximity to the U.S.-Mexico border, El Centro is situated in the Imperial Valley, one of southern California’s larger agricultural communities, attracting field workers and laborers from Mexico. Because of the seasonal nature of Imperial Valley work, the region suffers a 28-percent unemployment rate and a history of financial instability. Financial institutions (FIs) tied to the long-standing practice of lending money based solely on credit scores have had trouble realizing the growth potential and revenue opportunities that can come from properly serving the Hispanic market.

When now President and CEO Fidel Gonzalez joined FICU in 2009, he understood to successfully serve the local Hispanic population the credit union would need to change its lending philosophy. “Most Hispanics are in need of financial services, and they are frequently turned away from other FIs because of their credit scores and employment history,” said Gonzalez. “They need FIs who are willing to take a chance on them. So, FICU adopted a new lending structure allowing our credit union to place more emphasis on a member’s ability to pay moving forward, rather than on past delinquency.”

To do this, Gonzalez worked closely with his staff and industry. First, the team altered the credit union’s practice of using a member’s credit score as an approval mechanism. Rather, Gonzalez encouraged his team to focus on the member’s employment status, working to approve loans for members with 12 months of work history and able to maintain their existing trade lines. The staff also reviewed an applicant member’s credit history to better understand other financial obligations and the types of loan applicant members could afford. Under the new lending structure, a member’s credit score became a pricing tool in the loan application process, rather than a deciding factor.

According to Gonzalez, FICU today works with members to book a series of small loans, starting with $500 and working up to larger loans as credit improves. “We want members to be successful. So together we set realistic goals, loaning to them based on what they can afford,” said Gonzalez. “We impose credit limits to offset the risk, and we educate our loan recipients on the importance of paying — if they pay us, we’ll lend to them again. That’s a powerful motivator for our Hispanic members.”

To supplement its loan-builder program, Gonzalez also instituted the Opportunity Checking program at FICU. The program is designed for any member who has been denied a checking account in the past because of account mismanagement or a Chex Systems record. The goal of the program is to re-establish members into normal financial services and encourage them to stop using check-cashing establishments that charge high fees for access to cash.

Members open an Opportunity Checking account for $50 and are charged a $10 monthly maintenance fee to receive many of the advantages of a traditional checking account, including an ATM or debit card. The cards carry lower limits, but there is no minimum balance required and the accounts offer free home banking and bill pay. After 12 months, the Opportunity Checking account converts to a regular checking account that includes overdraft privilege, regular ATM and point-of-sale (POS) limits and other perks.

“The feedback from our members has been extremely positive,” said Gonzalez. “Because many of our members get paid weekly, the monthly fee is small compared to the 3- to 5-percent check-cashing establishments typically charge. This program is a win-win — Hispanics are gaining access to the financial services they desperately need at prices they can afford and with terms they can meet, and the credit union is able to capture lending activity that would have been lost had we not created a relationship.”

In the 18 months since Gonzalez and his team implemented these new programs, FICU opened 330 Opportunity Checking accounts and realized nearly $40,000 in fee income. The credit union also booked more than $1 million in loans and increased total net membership by 1,958 members, a 17-percent increase in a year and a half.

For FICU, Gonzalez concluded that “Making a Difference, One Member at a Time” isn’t just a clever marketing slogan. Rather, it’s a true reflection of the credit union’s commitment to innovation – stepping up to provide fair, dignified and affordable services to a deserving group of influential members.

Financial literacy is one of the most critical services that your credit union can provide members, particularly the Hispanic community in your area. Many Hispanics in the U.S. today are underserved, turning to friends and family for loans, or worse to expensive check-cashing or payday loan establishments.

With one out of two U.S. Hispanics being unbanked or underserved, your credit union has a tremendous opportunity to make a real difference in the lives of Hispanic members.

Coopera client Security One Federal Credit Union in Arlington, Texas, believes financial literacy efforts need to focus on the whole family’s financial needs. This begins by teaching children about saving and the advantages of holding a youth account and goes all the way through to helping parents understand how to improve credit scores or secure loans. Also, Security One works to educate business owners on the importance of budgeting expenses, filing taxes and preparing for audits.

Business Development Coordinator Danny Garcia said, “At Security One, we are focused on growing the Hispanic community’s ability to be more financially independent. Through our assistance and guidance, individuals are able to better themselves financially, which makes the whole community stronger. We take a holistic approach, networking and partnering with schools and universities, churches, as well as community organizations, like libraries, medical centers and government agencies, to promote financial literacy and the credit union difference.”

Some of the events Garcia and the team at Security One have participated in include:
– a bilingual presentation on the financial system to nearly 50 Hispanic church members
– a presentation on the importance of saving to 20 middle and high school students
– partnering with the local Head Start program to share information on basic budgeting
– sessions on how to build credit and secure auto financing

Garcia and the Security One team is also working closely with local groups to host an upcoming 4-day mobile event to help Hispanics secure the identification documents they need
for financial services, like checking and savings accounts, as well as auto, home and business loans and Security One’s “Faith” accounts. “It can take a month or more for Hispanics to get an appointment at the Mexican consulate for a Matricula card,” said Garcia. “Through the mobile event, we help 200 to 300 people per day signed up for Matricula ID cards each day. That’s the kind of effort that makes a real difference.”

As with any new program, it’s important not to recreate the wheel when developing financial literacy initiatives. To get started, you can utilize resources and opportunities available through community partnerships, Coopera and other industry partners to supplement your programs. As Garcia and Security One have proved, networking and community involvement are vital in a credit union’s outreach efforts.

Other resources readily available to your credit union include:
Spanish Seminars in a Box
Each Spanish Seminar in a Box contains culturally relevant Spanish content for your seminar and all of the materials you need to facilitate a successful session. All you need to do is add the presenter and have your outreach plan in place.
– Basic Steps to Managing Your Money: Spanish electronic member seminar kit
– Access to Money with Credit: Spanish electronic member seminar kit

El Poder es Tuyo Updates
– 4/15: How to use your tax refund
– 4/22: Don’t be a victim of tax ID theft– 4/29: What you need to know about for profit colleges
– 5/6: How the credit union can help your family
– 5/13: Preparing financially for the unexpected

International Credit Union Leadership Program
The International Credit Union Leadership Program brings emerging leaders from around the world to various credit unions, both in the U.S. and abroad, for intensive short-term credit union internships designed to broaden their professional expertise.

The program is designed to facilitate idea exchanges, promote foreign language development, enhance cultural diversity and improve problem-solving skills as they relate to global credit union development and management. The program also focuses on helping credit unions find new ways to attract young members.

Sometimes referred to as the “Mexican St. Patrick’s Day,” Cinco de Mayo (held each year on May 5th) is one of the most misunderstood holidays we celebrate in the U.S., even by people of Mexican heritage.

Despite its reputation, Cinco de Mayo does not mark Mexico’s Independence Day. That is celebrated on September 16, the day in 1810 when Father Miguel Hidalgo took to his pulpit in Dolores, Querétaro, and urged his congregation to join him in efforts to overthrow the Spanish tyranny in Mexico. The celebration is also known in Mexico as El Grito de Dolores or “Cry of Dolores.”

Just as there is a misconception about Cinco de Mayo, there are also common misconceptions about Hispanics and the Hispanic culture of which credit unions looking to better serve this market should be aware. These include:

–Hispanics speak several different forms of Spanish. While not all Hispanics speak Spanish, Spanish is the overarching language for many Latin American countries. According to Pew Research, more than 80 percent of Hispanic adults say they speak Spanish. Even though there are cultural nuances in the Spanish language, there are not completely different forms of the language in Latin American countries — the basic language structure of Spanish is shared.

That said, there may be different colloquialisms or words, phrases or statements, unique to a certain culture or region. To best serve your local Hispanic community, it is important to learn the make-up of the local population. Coopera can help with a comprehensive market analysis.

Rest assured, however, the basics of the Spanish language will be understood by your Hispanic members regardless of the Latin American country from which they hail.

–All Hispanics are poor immigrants. Not all Hispanics are immigrants (foreign nationals born outside of the U.S.), and the U.S. Census Bureau reported that there were over 2.1 million Hispanics in the U.S. with personal income over $65,000 in 2011. Today, the U.S. Hispanic population is made up of multiple generations of people from different countries of origin, from different income levels and different life experiences. Each Hispanic in the U.S. today can claim his/her own characteristics, beliefs and behaviors.

The Hispanic market in the U.S. is rapidly growing and changing, which presents important opportunities for credit unions that invest the time and resources in preparation for further expansion. One way to learn more, and to prepare your staff, is by investing in a resource like CUNA’s training-on-demand resource Hispanic Immigration Course. By becoming more familiar with the nuances of the Hispanic population, credit unions will be better positioned to provide for these members’ needs.

Please join us in voting for Warren Morrow, founder and late CEO of Coopera, to be the recipient of Credit Union Magazine’s 2013 “CU Hero of the Year” award. The four nominees for this year’s award exemplify the credit union philosophy of “people helping people” and have truly gone the extra mile to extend credit union service in their communities.

Mr. Morrow founded Coopera with the belief that Hispanics need credit unions as much as credit unions need Hispanics. He believed deeply in helping underserved Hispanics receive dignified financial services. By bringing financial stability to a home, Mr. Morrow believed, you could begin to address other social issues. Sadly, Mr. Morrow passed away in February, 2012.

As one of 11 credit union young professionals selected to participate in the January 2013 International Leadership Program through the World Council of Credit Unions, I was honored to have the opportunity to spend time at the COOPACRENE Credit Union in Neyba, Dominican Republic.

Through my role as Client Account Coordinator at Coopera, I have had the great privilege of working with outstanding credit union professionals around the U.S. One of the greatest joys of my work is seeing someone learn, or having their eyes opened, through a new experience, especially when it includes insight into a different culture. Although each of us had a different experience in the Dominican Republic, we walked away with an overwhelming sense of thankfulness that we were given this opportunity to immerse ourselves in the culture and participate in the our host families’ and credit unions’ daily activities. Time after time during this trip, I saw the eyes of my fellow travelers light up from something they learned or experienced.

It is a Coopera best practice to participate in international exchange programs, such as this one, for these very reasons — because by better understanding the different cultures we serve, we can better help our clients serve their customers. It’s a win-win situation. Also, I have observed on so many occasions that first-hand experiences help us all grow professionally and personally, often in ways we can’t predict.

After the recent trip to the Dominican Republic, I recognized the potential for more credit union professionals to participate in these types of international exchange programs. And here are 10 reasons why:

1. Exposure to new cultures and/or a deeper understanding of cultures

2. Enhance language skills and/or learn a new language

3. Learn credit union best practices to take back to home credit union

4. Share best practices with host credit union

5. Develop a global perspective on the credit union movement

6. Networking opportunities with credit union professionals around the U.S.

7. Develop sensitivity to other people from other cultures coming to the U.S.

8. Make lifetime friendships and memories

9. Personal and professional development

10. Take a risk and challenge yourself to think outside the box

The World Council of Credit Unions has several upcoming opportunities to have international experience in Costa Rica, Ecuador and Brazil. Visit http://www.woccu.org/events for more information.

For 13 days in January 2013, 11 young credit union professionals were selected to participate in the International Credit Union Leadership Program. This trip was made possible by a grant from the U.S. State Department, Bureau of Educational and Cultural Affairs, Office of Citizen Exchanges, and part of the larger U.S. Department of State Professional Fellows Program.

Each was placed in a different credit union or credit union association across the Dominican Republic. From Iowa, Traci Stiles, Business Development Manager at Des Moines Metro Credit Union in Des Moines, Iowa, was placed at the newest credit union in the Dominican Republic, CoopOriental; Erin O’Hern, Compliance Attorney at PolicyWorks, was placed with COOPBUENO; Anna Peña, Client Account Coordinator at Coopera, was placed at COOPACRENE.

Highlights from their experience have been shared in a series of blog posts.